Modvat credit for mixed mine-and-factory use allowed only to the extent items were used in both locations.

Modvat credit was held admissible for conveyor belts, ropes and flexible elements only to the extent they were used partly in mines and partly in the cement factory. The reasoning was that inputs need not be used exclusively within factory premises under the applicable rule, but that principle did not extend to goods used entirely in mines. Credit was therefore not admissible for items used exclusively in the mines.

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Issues: Whether Modvat credit was admissible on conveyor belt, ropes and flexible element used partly in mines and partly in the cement factory.

Analysis: Credit had been allowed on the basis that inputs need not be used only within the factory premises under the then applicable rule. The dispute concerned whether that reasoning could extend to the goods in question, especially where the items were used partly in the mines and partly in the factory. The Tribunal accepted that items so used partly in the mines and partly in the factory were eligible for Modvat credit, but items used exclusively in the mines were not so eligible.

Conclusion: Modvat credit was admissible only to the extent the items were used partly in the mines and partly in the factory, and was not admissible for items used exclusively in the mines.

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